By Amanda Morrall
New Zealand students borrowers, graduating on average close to $26,000 poorer, are growing in number and taking on an ever increasing amount of debt.
Statistics New Zealand reported today that the number of students taking out loans in 2010 grew by 6.9% from 2009, with allowances increasing by 16.4% over the same time period.
Students last year borrowed an average of $7,300, roughly $310 more than in 2009, the "largest annual increase in amounts borrowed since the student loan scheme began."
Last year, 45.6% of students (93,942) took advantage of the student loan system, up from 42.5% in 2009.
Industry and labour statistics manager Diane Ramsay said student borrowers (whose cumulative debt now tops NZ$12 billion) are growing mainly as a result of increase in fees at university.
As students are digging deeper into debt, their ability to repay it is shrinking.
Statistics New Zealand also noted that first-year income for those leaving study in 2009 was down 4.5, compared to leavers in 2008.
The department said the decrease in income (most acutely felt by leavers aged 20-24 whose income levels plunged 7%) reflected the impact of the recession on the labour market.
The New Zealand Union of Students’ Associations (NZUSA) said that as well as being financially and psychologically crippling, debt levels were a main driver for graduates leaving the country to look for higher paying work.
The NZUSA, in its 2010 Income & Expenditure Survey 2010, found that student loans played a major part in:
• Deciding when and whether to go overseas (69% and 62%)
• Deciding when and whether to have children (45% of respondents, and 24% respectively)
Additionally, the survey found that the highest perceived negative economic effects included the ability to buy a house (72%), and saving for the future (65%).
“The issue of this massive $12 billion student debt must be addressed. Just as many are now suggesting the country cannot afford to ignore the superannuation debate much longer, we also can’t afford to let the student debt mountain keep growing,” the NZUSA co-president David Do has warned.
While income for new graduates is declining, the prospects are still better than for those whom drop out, reports Statistics New Zealand.
"Income of graduates who left study in 2005 who were aged 20–24 years had increased by 41.0 percent by 2010, whereas income of those who did not complete their qualification increased by 31.9 percent. By 2010, those graduates were receiving on average 27.7 percent more income than their counterparts who had not completed their qualification ($45,240 compared to $35,430, respectively)."